1st Source Corporation · NASDAQ:SRCE
1st Source — Investor Presentation (October 2024)
46 slides from 1st Source's investor presentation, October 2024
Slide 1: Investor Presentation 3rd Quarter 2024
INVESTOR PRESENTATION 3rd Quarter 2024 NASDAQ: SRCE | www.1stsource.com
Slide 2: Disclosures
DISCLOSURES Forward-Looking Statements Except for historical information, the matters discussed may include “forward-looking statements.” Those statements are subject to material risks and uncertainties. 1st Source cautions readers not to place undue reliance on any forward-looking statements, which
Slide 3: Corporate Overview
CORPORATE OVERVIEW Founded in 1863 $8.8 billion Community Bank with International Reach headquartered in South Bend, Indiana Community Banking Locations throughout northern Indiana and southwestern Michigan Business and personal banking, payment services, lending, mortgage, and leasing Investm
Slide 4: Mission & Vision
MISSION & VISION Mission To help our clients achieve security, build wealth and realize their dreams by offering straight talk, sound advice and keeping their best interests in mind for the long-term. Vision Offer our clients the highest quality service Be the financial institution of choice in
Slide 5: Market Area
MARKET AREA Specialty Finance Loans & Leases $3.47 billion Community Bank Loans & Leases $3.16 billion page 5
Slide 6: Business Mix
BUSINESS MIX Loans & Leases Business Personal 75% 25% COMMUNITY BANKING SPECIALTY FINANCE 48% 52% page 6
Slide 7: Community Banking
COMMUNITY BANKING 77 Banking Centers 97 Twenty-four-hour ATMs 9 Trust & Wealth Advisory locations with approximately $6.0 billion of assets under management 10 1st Source Insurance offices 3 Loan Production offices In person Over the phone Online Mobile page 7
Slide 8: Renewable Energy Financing
RENEWABLE ENERGY FINANCING Our Renewable Energy Financing Division provides sponsors and developers with one-stop-shop financing by providing construction loans, permanent loans, and tax equity investments to community solar, commercial and industrial, small utility scale, university, and municipal
Slide 9: Specialty Finance Group
SPECIALTY FINANCE GROUP Auto and Light Truck Division Auto/light truck division provides financing for automobile rental and commercial auto leasing companies, and light truck rental and leasing companies. Medium and Heavy Duty Truck Division The medium and heavy duty truck division finances highway
Slide 10: Highly Rated, Feature-Rich Mobile App
HIGHLY RATED, FEATURE-RICH MOBILE APP 4.8 Digital Adoption¹ Mobile Users (000s)² 9.7K RATINGS 6 100% 80.0 27% 23% 22% 21% 75.0 75% 13% 12% 70.0 16% 14% 65.0 50% 60.0 74.8 63% 65% 67% 66.7 70.0 25% 57% 55.0 62.0 50.0 0% 45.0 Q3 21 Q3 22 Q3 23 Q3 24 Q3 21 Q3 22 Q3 23 Q3 24 9.7K RATINGS Mobile &
Slide 11: Instant Payments
INSTANT PAYMENTS Successfully launched instant payment systems Real Time Payments (RTP) and FedNow over three phases in 2023: • RTP Receive & Send Fully enabled ~May ‘23 • FedNow Receive & Send Fully enabled ~July ‘23 One of only 35 banks and credit unions to launch FedNow on day one (~1,000 F
Slide 12: An Experienced and Proven Team
AN EXPERIENCED AND PROVEN TEAM Executive Team 6 executives with an average 35 years each of banking experience and 26 years with 1st Source Business Banking Officers 40 business banking officers with an average 21 years each of lending experience and with 1st Source from 1 to 35 years Specialty Fina
Slide 13: Performance Client
PERFORMANCE CLIENT Indiana SBA Community Lender Award 2013-2023 #1 SBA Lender in our Indiana footprint #1 SBA Lender Headquartered in State of Indiana #1 Deposit share in our 16 contiguous county market #5 Lender of Community Development Loans (Total Dollars) in State of Indiana by Banks Headquarter
Slide 14: Performance Leadership
PERFORMANCE LEADERSHIP 2024 Forbes’ America’s Best Banks list #14 in the U.S. and #1 in Indiana 2024 Forbes’ Best in State Banks 2024 Forbes’ America’s Best-in-State Employers 2024 Forbes’ 500 Best Employers for New Grads 2024 US News & World Report – Best Companies to Work For - Midwest Indianapoli
Slide 15: Financial Review
FINANCIAL REVIEW
Slide 16: Core Deposit Franchise
CORE DEPOSIT FRANCHISE TOTAL AVERAGE DEPOSITS Core Deposits ($MM) Non-core Deposits ($MM) Effective Rate on Deposits (%) 9,000 4.20% 6957 7110 3.28% 6711 6343 285 836 947 6,000 356 6426 5737 6121 6163 5987 609 2.36% 2.38% 5128 1.77% 1.44% 3,000 0.52% 0.53% 0.38% 0.19% 0 -0.40% 2020 2021 2022 2023 20
Slide 17: Diversified Deposit Mix
Diversified Deposit Mix End of Period Balances Account Type Owner Classification Savings 17% Consumer (1) 47% Public Fund Time 18% 26% Brokered 8% Interest- bearing demand 34% Business Noninterest- 27% bearing (1) Includes business customer certificates of deposit which demand 23% were immaterial Ap
Slide 18: Deposit Market Share 16 County Contiguous Market
DEPOSIT MARKET SHARE 16 COUNTY CONTIGUOUS MARKET* Leading Market Share in Community Banking Markets ($000) $8,000,000 2024 1st Source ______14.28% $7,000,000 Chase ___________10.00% $6,000,000 Lake City Bank ___9.91% $5,000,000 Fifth Third ________4.86% Horizon Bank _____4.48% $4,000,000 $3,000,000
Slide 19: Growing Loan Portfolio
GROWING LOAN PORTFOLIO Total Average Loans & Leases Loans & Leases ($MM) Yield on Loans & Leases - FTE (%)* 7000 8.00% 6572 6204 7.00% 5567 6.86% 5463 5438 5500 6.25% 6.00% 5.00% 4000 4.74% 4.44% 4.32% 4.00% 2500 3.00% 2020 2021 2022 2023 2024 YTD * See “Reconciliation of non-GAAP Financial Measures
Slide 20: Diversified Loan Portfolio
DIVERSIFIED LOAN PORTFOLIO 2024 Average Loans by Type Commercial Commercial 18% Real Estate 17% Residential Real Estate 10% Aircraft Consumer 16% 2% Medium and Heavy Duty Truck 5% Construction Equipment Auto and Light 17% Truck 15% page 20
Slide 21: Strong Credit Quality
STRONG CREDIT QUALITY % of Net Loans and Leases Loan & Lease Loss Allowance Nonperforming Assets Net Charge-Offs (Recoveries) Solid Reserves Low Nonperforming Assets Limited Losses 2.56% 2.38% 2.32% 2.26% 2.30% 1.16% 0.77% 0.45% 0.47% 0.37% 0.17% 0.16% 0.10% 0.03% -0.04% 2020 2021 2022 2023 2024 202
Slide 22: Net Income & Earnings Per Share
NET INCOME & EARNINGS PER SHARE Net Income ($MM) EPCS (Diluted) $135 $6.00 124.9 118.5 120.5 $120 $5.00 $105 5.03 101.2 4.84 96.5 4.70 $90 $4.00 81.4 4.09 3.87 $75 $3.00 3.17 $60 $45 $2.00 $30 $1.00 $15 $0 $0.00 2020 2021 2022 2023 2023 2024 YTD YTD page 22
Slide 23: Pre-Tax, Pre-Provision Income
PRE-TAX, PRE-PROVISION INCOME $200 ($MM) 170.0 167.6 150.6 $150 142.3 140.8 129.1 $100 $50 $0 2020 2021 2022 2023 2023 2024 YTD YTD *See “Reconciliation of non-GAAP Financial Measures” in Appendix. page 23
Slide 24: ROAE and ROATE
INCOME PERFORMANCE METRICS 1st SOURCE PERFORMS WELL AGAINST PEERS WHILE MAINTAINING STRONG CAPITAL LEVELS YTD Median Peer Data* National C&I Midwest ROATE 14.12% 13.53% 15.28% 3.00% 16.00% ROAE 10.90% 10.77% 14.40% 14.82% ROAA 1.06% 1.23% 14.17% 12.85% 2.40% 12.50% 13.81% 13.48% ROAE and ROATE 13.07
Slide 25: Net Interest Margin (FTE)
NET INTEREST MARGIN (FTE)* Net Interest Income ($MM) Net Interest Margin (%) $300 5.25% 279.4 264.1 237.1 $240 226.4 221.9 207.9 4.25% $180 $120 3.59% 3.45% 3.51% 3.51% 3.25% 3.39% 3.23% $60 $0 2.25% 2020 2021 2022 2023 2023 2024 YTD YTD * See “Reconciliation of non-GAAP Financial Measures” in Appen
Slide 26: Diverse Sources of Noninterest Income
DIVERSE SOURCES OF NONINTEREST INCOME Noninterest Mortgage Insurance Income Commissions Banking Equipment Rental 5% Composition 8% 1% Trust, Wealth 2024 = $64.6MM* Advisory, and Retirement Plan Services Service Charges on 31% Deposit Accounts 15% Fair Value of Assets Under Management of $6.0B Debit
Slide 27: Operating Expenses
OPERATING EXPENSES Noninterest Expense ($MM)* Efficiency - Adjusted (%)* $210.0 80.0% 194.6 172.5 174.7 167.2 70.0% 143.2 145.3 $140.0 60.0% $70.0 54.2% 53.5% 54.2% 53.5% 50.0% 51.1% 51.2% $0.0 40.0% 2020 2021 2022 2023 2023 2024 YTD YTD * Note: Noninterest expense is shown net of leased equipment d
Slide 28: Strong Capital Position
STRONG CAPITAL POSITION Tier 1 Leverage Ratio Tier 1 Risk Based Ratio 15.50% 14.99% 15.84% 14.73% 14.84% 13.26% 13.93% 12.15% 11.89% 12.63% 8% Well Capitalized 5% Well Capitalized 2020 2021 2022 2023 2024 YTD 2020 2021 2022 2023 2024 YTD Total Risk Based Capital Ratio Tangible Common Equity / Tangib
Slide 29: Long History of Conservative Capital
LONG HISTORY OF CONSERVATIVE CAPITAL Total Capital (To Risk-Weighted Assets) 20.00% 17.10% 18.00% 16.00% 14.00% 12.00% 10% Well 10.00% Capitalized 8.00% 1st Source Corp Well-Capitalized page 29
Slide 30: Tangible Book Value Per Common Share
TANGIBLE BOOK VALUE PER COMMON SHARE* $45.00 $41.62 $40.00 $37.06 $35.00 $33.64 $31.62 $31.63 $30.00 $29.18 $26.30 $25.00 $24.47 $20.00 $15.00 2017 2018 2019 2020 2021 2022 2023 2024 YTD * See “Reconciliation of non-GAAP Financial Measures” in Appendix. page 30
Slide 31: Common Dividends Per Share
COMMON DIVIDENDS PER SHARE 36 YEARS OF CONSECUTIVE DIVIDEND GROWTH $1.600 1.400 $1.400 1.300 1.260 1.210 $1.200 1.130 1.100 $1.000 0.960 $0.800 0.760 0.720 0.645 0.671 $0.600 $0.400 $0.200 $0.000 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 YTD page 31
Slide 32: Delivering Returns to Shareholders
DELIVERING RETURNS TO SHAREHOLDERS Value of $100 Invested in 1st Source since 1971 Inception with Dividends Reinvested vs. Total Return of Stock Indices page 32
Slide 33: Delivering Returns to Shareholders
DELIVERING RETURNS TO SHAREHOLDERS December 31, 2007 – October 25, 2024 page 33
Slide 34: Performance Financial
PERFORMANCE FINANCIAL FINANCIAL 2019-2024 KBW Bank Honor Roll Sixth consecutive year named among top 5% of banks with more than $500 million in total assets and ten consecutive years of increased earnings per share 2024 Forbes’ America’s Best Banks list #14 in the U.S. and #1 in Indiana 2023 S&P Glo
Slide 35: Investment Considerations
INVESTMENT CONSIDERATIONS Consistent and superior financial performance with a focus on long-term earnings per share and tangible book value growth Experienced and proven team with significant investment in bank Diversification of product mix and geography with asset generation capability Leading ma
Slide 36: Contact Information
CONTACT INFORMATION Christopher J. Murphy III Chairman of the Board and CEO 1st Source Corporation (574) 235-2711 Murphy-c@1stsource.com Andrea G. Short President, 1st Source Corporation President and CEO, 1st Source Bank (574) 235-2348 shorta@1stsource.com Brett A. Bauer CFO and Treasurer (574) 235
Slide 37: Appendix
APPENDIX
Slide 38: Consolidated Balance Sheet
CONSOLIDATED BALANCE SHEET (Dollars in millions) 2020 2021 2022 2023 2024 YTD Cash and cash equivalents $ 243 $ 525 $ 123 $ 130 $ 169 Investment securities and other investments* 1,225 1,890 1,800 1,648 1,587 Loans and leases, net of unearned discount 5,502 5,360 6,015 6,520 6,620 Allowance for loan
Slide 39: Consolidated Income Statement
CONSOLIDATED INCOME STATEMENT 2023 2024 (Dollars in millions) 2020 2021 2022 2023 YTD YTD Net interest income $ 226 $ 237 $ 263 $ 279 $ 207 $ 221 Provision (recovery of provision) for credit losses 36 (4) 13 6 4 10 Noninterest income* 83 86 81 84 65 65 Noninterest expense* 167 172 174 195 143 145 In
Slide 40: Aircraft Portfolio
AIRCRAFT PORTFOLIO INDUSTRIES BY NAICS Retail Trade Construction 8% 12% Manufacturing 8% Ag, Forestry, Fishing & Hunting 9% Services 23% Wholesale Trade 4% Other* 4% Transportation Finance & Insurance & Warehousing and Real Estate 15% 17% * Other includes: Mining, Utilities, and Information page 40
Slide 41: Asset Liability Management
ASSET LIABILITY MANAGEMENT Net Interest Income Sensitivity Interest Rate Risk Characteristics 1 year difference versus no rate change +100 bps Parallel -100 bps Parallel • Variable rate loans reprice quickly Ramp Ramp — 90% of Variable reprice within 3 months • Fixed rate loans have short terms +0.6
Slide 42: Ownership Summary
OWNERSHIP SUMMARY 1st Source ESOP, Institutional 11,673,251 47.6% Retail/Other, 2.9% Insiders 7,765,157 31.7% 17.8% Institutional, Retail/Other 4,354,514 17.8% 47.6% (2) 1st Source ESOP 721,461 2.9% (1) Total Shares Outstanding 24,514,383 100.0% Institution (Top 10 Institutions) Shares % of Total Bl
Slide 43: Reconciliation of Non-GAAP Financial Measures
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES Calculation of Yield on Loans and Leases (Dollars in thousands) 2020 2021 2022 2023 2024 YTD (A) Loans and leases interest income (GAAP) $ 242,172 $ 234,583 $ 263,677 $ 387,143 $ 337,341 (B) Plus: loans and leases fully tax-equivalent adjustments 333 319
Slide 44: Reconciliation of Non-GAAP Financial Measures
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES Calculation of Net Interest Margin (Dollars in thousands) 2020 2021 2022 2023 2023 YTD 2024 YTD (A) Interest income (GAAP) $ 263,031 $ 254,772 $ 293,816 $ 416,907 $ 302,336 $ 360,867 (B) Plus: fully tax-equivalent adjustments 543 459 628 741 575 436 (C)
Slide 45: Reconciliation of Non-GAAP Financial Measures
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES Calculation of Efficiency Ratio (Dollars in thousands) 2020 2021 2022 2023 2023 YTD 2024 YTD (A) Net interest income (GAAP) $ 225,820 $ 236,638 $ 263,469 $ 278,647 $ 207,317 $ 221,451 (B) Net interest income - FTE 226,363 237,097 264,097 279,388 207,892
Slide 46: Reconciliation of Non-GAAP Financial Measures
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES Calculation of Tangible Book Value per Common Share (Dollars in thousands, except for per share data) 2017 2018 2019 2020 2021 2022 2023 2024 YTD (A) Total common shareholders' equity (GAAP) $ 718,537 $ 762,082 $ 828,277 $ 886,845 $ 916,255 $ 864,068 $ 9